UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): February 24, 2022
Enstar Group Limited
(Exact name of registrant as specified in its charter)
| Bermuda | N/A | |||||||||||||
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||||||||||||
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (441 ) 292-3645
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |||||
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol(s) | Name of Each Exchange on Which Registered | |||||||||
| LLC | |||||||||||
| LLC | |||||||||||
| Perpetual Non-Cumulative Preferred Share, Series D, Par Value $1.00 Per Share | |||||||||||
| LLC | |||||||||||
| in a 7.00% Perpetual Non-Cumulative Preferred Share, Series E, Par Value $1.00 Per Share | |||||||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging Growth Company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition.
On February 24, 2022, the Company issued a press release announcing its results for the year ended December 31, 2021 (the "Press Release"), a copy of which is furnished with this report as Exhibit 99.1 and incorporated herein by reference, and a Financial Supplement for the year ended December 31, 2021 (the “Financial Supplement”), a copy of which is furnished with this report as Exhibit 99.2 and is incorporated herein by reference. The Financial Supplement will be available on the “Investor Relations” page of the Company's website located at www.enstargroup.com.
The information contained in the Press Release and the Financial Supplement is summary information that is intended to be considered in the context of the Company’s Securities and Exchange Commission (“SEC”) filings and other public announcements that the Company may make, by press release or otherwise, from time to time. The Company undertakes no duty or obligation to publicly update or revise the information contained in the Press Release and the Financial Statement, although it may do so from time to time as its management believes is warranted. Any such updating may be made through the filing of other reports or documents with the SEC, through press releases or through other public disclosure.
The information presented in this Current Report on Form 8-K and Exhibits 99.1 and 99.2 shall not be deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, unless the Company specifically states that the information is to be considered “filed” under the Exchange Act or specifically incorporates it by reference into a filing under the Securities Act of 1933, as amended.
Item 9.01. Financial Statements and Exhibits
Exhibits
Exhibit No. | Description | |||||||
| Press Release, dated February 24, 2022. | ||||||||
Financial Supplement for the year ended December 31, 2021. | ||||||||
| 101 | Pursuant to Rule 406 of Regulation S-T, the cover page information in formatted in Inline XBRL. | |||||||
| 104 | Cover page Interactive Data File (embedded within the Inline XBRL document and included in Exhibit 101). | |||||||
1
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| ENSTAR GROUP LIMITED | |||||||||||
| February 24, 2022 | By: | /s/ Orla Gregory | |||||||||
| Orla Gregory | |||||||||||
| Chief Operating Officer and Acting Chief Financial Officer | |||||||||||
Press Release 
Date: February 24, 2022 Contact: Enstar Communications
For Release: Immediately Telephone: +1 (441) 292-3645
Enstar Group Limited Reports 2021 Year-End Results
•Net Earnings of $437 million for the Year Ended December 31, 2021
•Return on Equity of 7.1% for the Year Ended December 31, 2021
•Book Value Per Ordinary Share and Adjusted Book Value Per Ordinary Share* of $316.34 and $310.80, respectively, as of December 31, 2021, an increase of 10.4% and 10.5%, respectively, year over year
Hamilton, Bermuda - February 24, 2022 - Enstar Group Limited (Nasdaq: ESGR) filed its annual report on Form 10-K with the SEC earlier today, reporting its earnings and financial position for the year ended December 31, 2021.
Enstar reported consolidated net earnings of $437 million (or earnings of $21.71 per fully diluted ordinary share) for the year ended December 31, 2021, compared to consolidated net earnings of $1.7 billion (or earnings of $78.80 per fully diluted ordinary share) for the year ended December 31, 2020.
The key drivers of net earnings for the year ended December 31, 2021 were:
•Net investment income of $312 million;
•Net unrealized gains of $178 million, comprised of $384 million relating to our other investments, including equities, partially offset by net unrealized losses of $206 million relating to our fixed maturity securities; and
•Favorable prior period development in net incurred losses and loss adjustment expense of $283 million.
Return on equity and adjusted return on equity* were 7.1% and 9.2%, respectively, for the year ended December 31, 2021, compared to 39.7% and 43.6%, respectively, for the year ended December 31, 2020 and 26.6% and 19.6%, respectively, for the year ended December 31, 2019.
Enstar's ordinary shareholders' equity at December 31, 2021 amounted to $5.6 billion (or book value per ordinary share of $316.34 and adjusted book value per ordinary share* of $310.80), compared to $6.2 billion (or book value per ordinary share of $286.45 and adjusted book value per ordinary share* of $281.20) at December 31, 2020.
The Form 10-K, which is available on Enstar's website www.enstargroup.com, contains a more detailed description of Enstar's business and financial results. The Investor Relations section of Enstar's website also includes a link to view the "2021 Year-End Update" presentation containing expanded commentary from the management team on year-end results and other business updates.
About Enstar
Enstar is a NASDAQ-listed leading global insurance group that offers capital release solutions through its network of group companies in Bermuda, the United States, the United Kingdom, Continental Europe, Australia, and other international locations. A market leader in completing legacy acquisitions, Enstar has acquired over 110 companies and portfolios since its formation in 2001. For further information about Enstar, see www.enstargroup.com.
*Non-GAAP measure; refer to "Non-GAAP Financial Measures" below for reconciliations to the applicable GAAP financial measures.
Enstar Group Limited | 2021 Earnings Press Release 1
Non-GAAP Financial Measures
In addition to our key financial measures presented in accordance with GAAP, we present other non-GAAP financial measures that we use to manage our business, compare our performance against prior periods and against our peers, and as performance measures in our annual incentive compensation program.
These non-GAAP financial measures provide an additional view of our operational performance over the long-term and provide the opportunity to analyze our results in a way that is more aligned with the manner in which our management measures our underlying performance.
The presentation of these non-GAAP financial measures, which may be defined and calculated differently by other companies, is used to enhance the understanding of certain aspects of our financial performance. It is not meant to be considered in isolation, superior to, or as a substitute for the directly comparable financial measures prepared in accordance with GAAP.
We have changed our non-GAAP measures in 2021 as follows:
•Conformed our naming convention so that all non-GAAP measures are prefixed by the word, “adjusted”. We believe this makes a clear distinction between GAAP and non-GAAP measures. For example, our fully diluted book value per share (“FDBVPS”) is now named adjusted book value per ordinary share.
•Amended our calculation of operating income (loss) for the year by additionally adjusting for the amortization of fair value adjustments as we believed it was relevant for this measure to be consistent with our calculation of adjusted run-off liability earnings. Additionally, we now express this measure as an adjusted return on equity after adjustments to our balance sheet items relating to any adjustments in the numerator.
We have presented the results and GAAP reconciliations for these measures for the relevant periods.
| Non-GAAP Measure | Definition | Purpose of Non-GAAP Measure over GAAP Measure | ||||||||||||
| Adjusted book value per ordinary share | Total Enstar ordinary shareholders' equity, adjusted to add: -proceeds from assumed exercise of warrants Divided by Number of ordinary shares outstanding, adjusted for: -shares issued from assumed exercise of warrants, -the ultimate effect of any dilutive securities on the number of ordinary shares outstanding | Increases the number of ordinary shares to reflect the exercise of warrants and equity awards granted but not yet vested as, over the long term, this presents a prudent view of our book value per share. We use this non-GAAP measure in our annual incentive compensation program. | ||||||||||||
Enstar Group Limited | 2021 Earnings Press Release 2
| Non-GAAP Measure | Definition | Purpose of Non-GAAP Measure over GAAP Measure | ||||||||||||
| Adjusted return on equity | Adjusted operating income (loss) attributable to Enstar ordinary shareholders divided by adjusted opening Enstar ordinary shareholder's equity | Although we have historically disclosed adjusted operating income (loss) attributable to Enstar ordinary shareholders, calculating the operating income (loss) as a percentage of our adjusted opening Enstar ordinary shareholders' equity provides a more valuable and consistent measure of the performance of our business, and enhances comparisons to prior periods: •by adjusting investment returns for the temporary impact of the change in fair value of fixed maturity securities (both credit spreads and interest rates) which we hold until the earlier of maturity or used to fund any settlement of related liabilities which are generally recorded at cost. •by removing the impact of non-cash charges that obscure our trends on a consistent basis. •by removing items that are not indicative of our ongoing operations; We use this non-GAAP measure in our annual incentive compensation program. We now include the amortization of fair value adjustments as a non-GAAP adjustment to the adjusted operating income (loss) attributable to Enstar ordinary shareholders as it is considered to be a non-cash charge and not indicative of our operating results. Prior periods were restated for this revision. | ||||||||||||
Adjusted operating income (loss) attributable to Enstar ordinary shareholders (numerator) | Net earnings (loss) attributable to Enstar ordinary shareholders, adjusted for: -net realized and unrealized (gains) losses on fixed maturity investments and funds held-directly managed -change in fair value of insurance contracts for which we have elected the fair value option (1) -amortization of fair value adjustments -net gain/loss on purchase and sales of subsidiaries -net earnings from discontinued operations -tax effects of adjustments -adjustments attributable to noncontrolling interest | |||||||||||||
Adjusted opening Enstar ordinary shareholders' equity (denominator) | Opening Enstar ordinary shareholders' equity, less: -unrealized gains (losses) on fixed maturity investments and funds held-directly managed, -fair value of insurance contracts for which we have elected the fair value option (1), -fair value adjustments, and -net assets of held for sale or disposed subsidiaries classified as discontinued operations | |||||||||||||
(1) Comprises the discount rate and risk margin components.
Reconciliation of Non-GAAP Financial Measures
Adjusted book value per ordinary share*
The below table presents a reconciliation of book value per ordinary share to adjusted book value per ordinary share* as of December 31, 2021 and 2020:
| As of December 31, | ||||||||||||||||||||||||||||||||||||||
| 2021 | 2020 | |||||||||||||||||||||||||||||||||||||
Equity (1) | Ordinary Shares | Per Share Amount | Equity (1) | Ordinary Shares | Per Share Amount | |||||||||||||||||||||||||||||||||
| (in millions of U.S. dollars, except share and per share data) | ||||||||||||||||||||||||||||||||||||||
| Book value per ordinary share | $ | 5,586 | 17,657,944 | $ | 316.34 | $ | 6,164 | 21,519,602 | $ | 286.45 | ||||||||||||||||||||||||||||
| Non-GAAP adjustments: | ||||||||||||||||||||||||||||||||||||||
| Share-based compensation plans | — | 315,205 | — | 298,095 | ||||||||||||||||||||||||||||||||||
| Warrants | — | — | 20 | 175,901 | ||||||||||||||||||||||||||||||||||
| Adjusted book value per ordinary share* | $ | 5,586 | 17,973,149 | $ | 310.80 | $ | 6,184 | 21,993,598 | $ | 281.20 | ||||||||||||||||||||||||||||
(1) Equity comprises Enstar ordinary shareholders' equity, which is calculated as Enstar shareholders' equity less preferred shares ($510 million in 2021 and 2020, respectively), prior to any non-GAAP adjustments.
Enstar Group Limited | 2021 Earnings Press Release 3
Adjusted return on equity*
The table below presents a reconciliation of return on equity to adjusted return on equity* for the years ended December 31, 2021, 2020 and 2019:
| For the Year Ended December 31, | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2021 | 2020 | 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Net earnings (1) | Opening equity (1) | Ratio | Net earnings (1) | Opening equity (1) | Ratio | Net earnings (1) | Opening equity (1) | Ratio | |||||||||||||||||||||||||||||||||||||||||||||
| (in millions of U.S. dollars) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Net earnings/Opening equity/ROE (1) | $ | 437 | $ | 6,164 | 7.1 | % | $ | 1,719 | $ | 4,332 | 39.7 | % | $ | 902 | $ | 3,392 | 26.6 | % | |||||||||||||||||||||||||||||||||||
| Non-GAAP adjustments: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Remove: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized losses (gains) on fixed maturity investments and funds held - directly managed / Unrealized (losses) gains on fixed maturity investments and funds held - directly managed (2) | 210 | (560) | (306) | (277) | (516) | 227 | |||||||||||||||||||||||||||||||||||||||||||||||
Change in fair value of insurance contracts for which we have elected the fair value option / Fair value of insurance contracts for which we have elected the fair value option (3) | (75) | (33) | 119 | (130) | 117 | (244) | |||||||||||||||||||||||||||||||||||||||||||||||
| Amortization of fair value adjustments / Fair value adjustments | 16 | (128) | 27 | (152) | 51 | (199) | |||||||||||||||||||||||||||||||||||||||||||||||
| Net gain on purchase and sales of subsidiaries | (73) | (3) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Net earnings from discontinued operations / Net assets of entities classified as held for sale and discontinued operations | — | — | (16) | (266) | (7) | (210) | |||||||||||||||||||||||||||||||||||||||||||||||
Tax effects of adjustments (4) | (21) | 23 | 36 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Adjustments attributable to noncontrolling interest (5) | 6 | 13 | 109 | 15 | 86 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Adjusted net earnings/Adjusted opening equity/Adjusted ROE* | $ | 500 | $ | 5,443 | 9.2 | % | $ | 1,576 | $ | 3,616 | 43.6 | % | $ | 598 | $ | 3,052 | 19.6 | % | |||||||||||||||||||||||||||||||||||
(1) Net earnings comprises net earnings attributable to Enstar ordinary shareholders, prior to any non-GAAP adjustments. Opening equity comprises Enstar ordinary shareholders' equity, which is calculated as opening Enstar shareholders' equity less preferred shares ($510 million as of December 31, 2020, 2019 and 2018, respectively), prior to any non-GAAP adjustments.
(2) Represents the net realized and unrealized gains and losses related to fixed maturity securities. Our fixed maturity securities are held directly on our balance sheet and also within the "Funds held - directly managed" balance.
(3) Comprises the discount rate and risk margin components.
(4) Represents an aggregation of the tax expense or benefit associated with the specific country to which the pre-tax adjustment relates, calculated at the applicable jurisdictional tax rate.
(5) Represents the impact of the adjustments on the net earnings (loss) attributable to noncontrolling interest associated with the specific subsidiaries to which the adjustments relate.
*Non-GAAP measure.
Cautionary Statement
This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include statements regarding the intent, belief or current expectations of Enstar and its management team. Investors are cautioned that any such forward-looking statements speak only as of the date they are made, are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those projected in the forward-looking statements as a result of various factors. Important risk factors regarding Enstar can be found under the heading "Risk Factors" in our Form 10-K for the year ended December 31, 2021 and are incorporated herein by reference. Furthermore, Enstar undertakes no obligation to update any written or oral forward-looking statements or publicly announce any updates or revisions to any of the forward-looking statements contained herein, to reflect any change in its expectations with regard thereto or any change in events, conditions, circumstances or assumptions underlying such statements, except as required by law.
Enstar Group Limited | 2021 Earnings Press Release 4
enstargroup.com ENSTAR GROUP LIMITED Investor Financial Supplement December 31, 2021
| enstargroup.com 2 Table of Contents Page Explanatory Notes 3 Financial Highlights 5 Book Value Per Share & Return On Equity 7 Consolidated Results by Segment 8 Prior Period Development (“PPD”) by Acquisition Year 12 Ultimate Losses % Acquired Losses by Acquisition Year 13 Adjusted PPD by Acquisition Year 14 Adjusted Ultimate Losses % Acquired Losses 15 Capital Position & Credit Ratings 16 Non-GAAP Measures 17 Reconciliation to Adjusted Book Value per Share 19 Reconciliation to Adjusted Return on Equity 20 Reconciliation to Adjusted Total Investment Return 22 Reconciliation to Adjusted Run-off Liabilities Earnings 23 Reconciliation of PPD by Acquisition Year 27 Reconciliation of Assumed and Acquired Reserves 29 Investable Assets - Management’s View 30
| enstargroup.com 3 Explanatory Notes About Enstar Enstar is a NASDAQ-listed leading global (re)insurance group that offers innovative capital release solutions through its network of group companies in Bermuda, the United States, the United Kingdom, Continental Europe, Australia, and other international locations. A market leader in completing legacy acquisitions, Enstar has acquired over 110 companies and portfolios since its formation in 2001. For further information about Enstar, see www.enstargroup.com. Basis of Presentation In this Investor Financial Supplement, the terms "we," "us," "our," "Enstar," or "the Company" refer to Enstar Group Limited and its consolidated subsidiaries. All information contained herein is unaudited. Unless otherwise noted, amounts are in millions of U.S. Dollars, except for share and per share amounts. Certain prior period comparatives have been reclassified to conform to the current presentation. This Investor Financial Supplement is being provided for informational purposes only. It should be read in conjunction with documents filed by Enstar with the U.S. Securities and Exchange Commission, including its Annual Reports on Form 10-K and its Quarterly Reports on Form 10-Q. Segment Change Effective January 1, 2021, we revised our segment structure to align with how our chief operating decision maker (“CODM”), who was determined to be our Chief Executive Officer, views our business, assesses performance and allocates resources to our business components. Following the acquisition of Enhanzed Re on September 1, 2021, our business is organized into four reportable segments: (i) Run-off: consists of our acquired property and casualty and other (re)insurance business, including our defendant and asbestos and environmental business and StarStone’s non-U.S. operations (“StarStone International”) (from January 1, 2021) following our decision to place it into an orderly run-off (the “StarStone International Run-off”). Our primary objective of the Run-off segment is to recognize favorable prior period development in our net incurred losses and LAE (run-off liability earnings or “RLE”) over time by settling claims in a timely, cost efficient manner using our claims management expertise, including settling claims for lower than outstanding ultimate loss estimates and implementation of reinsurance and commutation strategies; (ii) Enhanzed Re: consists of life and property aggregate excess of loss (catastrophe) business. Our primary objective of the Enhanzed Re segment is to reinsure products that focus on longevity and investment risks; (iii) Investments: consists of our investment activities and the performance of our investment portfolio, excluding those investable assets attributable to our Legacy Underwriting segment. Our primary objective of the Investments segment is to obtain the highest possible risk adjusted returns while maintaining prudent diversification of assets and operating within the constraints of a global regulated (re)insurance company. We additionally consider the liquidity requirements and duration of our claims, policyholder benefits and contract liabilities; and (iv) Legacy Underwriting: consists of businesses that we have either, in the case of Atrium Underwriting Group Limited and its subsidiaries (“Atrium”), exited via the sale of the majority of our interest in or, in the case of StarStone International (included in the Legacy Underwriting Segment through December 31, 2020), placed into run-off. Prior to January 1, 2021, this segment comprised SGL No. 1 Limited’s (“SGL No.1’s”) 25% net share of Atrium's Syndicate 609 business at Lloyd’s and StarStone International. From January 1, 2021, this segment comprises SGL No.1's 25% gross share of the 2020 and prior underwriting years of Atrium's Syndicate 609 at Lloyd's, offset by the contractual transfer of the results of that business to the Atrium entities that were divested in an exchange transaction. There is no net retention for Enstar on Atrium's 2020 and prior underwriting years. For further information regarding these activities, refer to Note 5 - "Divestitures, Held-for-Sale Businesses and Discontinued Operations" to our consolidated financial statements included within Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2021. In addition, our corporate and other activities, which do not qualify as an operating segment, includes income and expense items that are not directly attributable to our reportable segments. These include (a) holding company income and expenses, (b) the amortization of deferred charge assets (“DCA”) on retroactive reinsurance contracts, (c) the amortization of fair value adjustments associated with the acquisition of companies, (d) changes in the discount rate and risk margin components of the fair value of assets and liabilities related to our assumed retroactive reinsurance contracts for which we have elected the fair value option, (e) corporate expenses not allocated to our reportable segments, (f) debt servicing costs, (g) net foreign exchange (gains) losses, (h) gains (losses) arising on the purchases and sales of subsidiaries (if any), (i) income tax benefit (expense), (j) net earnings (losses) from discontinued operations, net of income tax (if any), (k) net (earnings) loss attributable to noncontrolling interest, and (l) preferred share dividends. Items (b), (c) and (d) above are included within corporate and other activities since the CODM evaluates the performance of the Run-off and Legacy Underwriting segments without consideration of these amounts. Refer to Note 2 - "Significant Accounting Policies" in the notes to our consolidated financial statements included within Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2021 for further information on these items. Following the re-organization of our reportable segments during the first quarter of 2021 as described above, we restated the prior period comparatives to conform to the current period presentation.
| enstargroup.com 4 Explanatory Notes (continued) Non-GAAP Financial Measures In addition to our key financial measures presented in accordance with GAAP, we present other non-GAAP financial measures that we use to manage our business, compare our performance against prior periods and against our peers, and as performance measures in our annual incentive compensation program. These non-GAAP financial measures provide an additional view of our operational performance over the long-term and provide the opportunity to analyze our results in a way that is more aligned with the manner in which our management measures our underlying performance. The presentation of these non-GAAP financial measures, which may be defined and calculated differently by other companies, is used to enhance the understanding of certain aspects of our financial performance. It is not meant to be considered in isolation, superior to, or as a substitute for the directly comparable financial measures prepared in accordance with GAAP. We have changed our non-GAAP measures in 2021 as follows: • Conformed our naming convention so that all non-GAAP measures are prefixed by the word, “adjusted”. We believe this makes a clear distinction between GAAP and non-GAAP measures. For example, our fully diluted book value per share (“FDBVPS”) is now named adjusted book value per ordinary share. • Replaced our claims saving metric with adjusted run-off liability earnings (“Adjusted RLE”), that now includes the amortization cost of DCA as we believe this represents the notional lower yield we accept when we enter into a transaction where we record a DCA. Additionally, we are representing this as a yield on average net loss reserves to facilitate comparisons across acquisition years and different reporting periods. • Amended our calculation of operating income (loss) for the year by additionally adjusting for the amortization of fair value adjustments as we believed it was relevant for this measure to be consistent with our calculation of Adjusted RLE. Additionally, we now express this measure as an Adjusted ROE after adjustments to our balance sheet items relating to any adjustments in the numerator. • We created new measures of adjusted total investment return (“Adjusted TIR”) and Adjusted RLE to show performance yields on our two streams of income arising from our capital release solutions. • We added management’s view of investable assets which “looks through” the legal form of our investments to the underlying economic exposure, consistent with the way we view our investment portfolio composition. We have presented the results and GAAP reconciliations for these measures for the quarters ended December 31, 2021 and 2020 and the years ended December 31, 2021, 2020, 2019, 2018 and 2017. Refer to pages 17 to 31 for further details. Cautionary Statement This Investor Financial Supplement contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include statements regarding the intent, belief or current expectations of Enstar and its management team. Investors are cautioned that any such forward-looking statements speak only as of the date they are made, are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those projected in the forward-looking statements as a result of various factors. Important risk factors regarding Enstar can be found under the heading "Risk Factors" in our Form 10-K for the year ended December 31, 2021 and are incorporated herein by reference. Furthermore, Enstar undertakes no obligation to update any written or oral forward-looking statements or publicly announce any updates or revisions to any of the forward- looking statements contained herein, to reflect any change in its expectations with regard thereto or any change in events, conditions, circumstances or assumptions underlying such statements, except as required by law.
| enstargroup.com 5 Three Months Ended Year Ended December 31, 2021 December 31, 2020 December 31, 2021 December 31, 2020 Key Earnings Metrics Annualized return on equity 5.2 % 61.9 % 7.1 % 39.7 % Annualized adjusted return on equity (1) 6.1 % 54.4 % 9.2 % 43.6 % Key Run-off Metrics Average net loss reserves $ 11,759 $ 8,471 $ 10,050 $ 8,112 Annualized run-off liability earnings 3.2 % 0.7 % 2.8 % (0.1) % Average adjusted net loss reserves (1) $ 11,678 $ 7,909 $ 9,750 $ 7,509 Annualized adjusted run-off liability earnings (1) 3.1 % 3.4 % 2.0 % 2.5 % Key Investment Return Metrics Average investable assets $ 21,569 $ 16,824 $ 20,840 $ 15,443 Annualized total investment return 1.5 % 22.6 % 2.5 % 14.1 % Investment book yield 1.6 % 2.0 % 1.8 % 2.5 % Earnings from equity method investments $ (8) $ 86 $ 93 $ 239 Average adjusted investable assets (1) $ 21,438 $ 16,336 $ 20,561 $ 15,153 Annualized adjusted total investment return (1) 2.0 % 20.8 % 3.6 % 12.4 % Key Shareholder Metrics Ordinary shareholders’ equity $ 5,586 $ 6,164 $ 5,586 $ 6,164 Total Enstar shareholders’ equity $ 6,096 $ 6,674 $ 6,096 $ 6,674 Book value per ordinary share $ 316.34 $ 286.45 $ 316.34 $ 286.45 Adjusted book value per ordinary share (1) $ 310.80 $ 281.20 $ 310.80 $ 281.20 Change in adjusted book value per ordinary share 1.2 % 16.0 % 10.5 % 42.1 % Ordinary shares repurchased: Shares 167,617 3,816 4,010,695 178,280 Cost $ 40 $ 1 $ 942 $ 26 Average price per share $ 241.13 $ 161.64 $ 234.84 $ 145.87 Total ordinary shares outstanding 17,657,944 21,519,602 17,657,944 21,519,602 Adjusted ordinary shares outstanding 17,973,149 21,993,598 17,973,149 21,993,598 Key Balance Sheet Metrics Total assets $ 24,429 $ 21,627 $ 24,429 $ 21,627 Debt obligations $ 1,691 $ 1,373 $ 1,691 $ 1,373 Total liabilities $ 17,924 $ 14,574 $ 17,924 $ 14,574 Total investable assets to ordinary shareholders’ equity 3.89x 2.80x 3.89x 2.80x Total net loss reserves to ordinary shareholders’ equity 2.07x 1.39x 2.07x 1.39x Debt to total capitalization attributable to Enstar 21.7 % 17.1 % 21.7 % 17.1 % Financial Highlights (1) Non-GAAP financial measure, refer to pages 17 to 31 for explanatory notes and a reconciliation to the most directly comparable GAAP measure.
| enstargroup.com 6 Year Ended December 31, 2021 December 31, 2020 December 31, 2019 December 31, 2018 (2) December 31, 2017 (2) Key Earnings Metrics Return on equity 7.1 % 39.7 % 26.6 % (5.2) % 11.1 % Adjusted return on equity (1) 9.2 % 43.6 % 19.6 % 2.5 % 11.0 % Key Run-off Metrics Average net loss reserves $ 10,050 $ 8,112 $ 7,467 $ 6,351 $ 4,977 Run-off liability earnings 2.8 % (0.1) % (0.5) % 3.3 % 4.9 % Average adjusted net loss reserves (1) $ 9,750 $ 7,509 $ 6,617 $ 5,436 $ 4,119 Adjusted run-off liability earnings (1) 2.0 % 2.5 % 2.8 % 5.4 % 4.3 % Key Investment Return Metrics Average investable assets $ 20,840 $ 15,443 $ 13,758 $ 10,322 $ 8,343 Total investment return 2.5 % 14.1 % 10.0 % (1.0) % 4.9 % Investment book yield 1.8 % 2.5 % 2.8 % 2.5 % 2.2 % Earnings from equity method investments $ 93 $ 239 $ 56 $ 42 $ 6 Average adjusted investable assets (1) $ 20,561 $ 15,153 $ 13,646 $ 10,393 $ 8,303 Adjusted total investment return (1) 3.6 % 12.4 % 6.3 % 1.3 % 4.0 % Key Shareholder Metrics Ordinary shareholders’ equity $ 5,586 $ 6,164 $ 4,332 $ 3,392 $ 3,137 Total Enstar shareholders’ equity $ 6,096 $ 6,674 $ 4,842 $ 3,902 $ 3,137 Basic book value per ordinary share $ 316.34 $ 286.45 $ 201.39 $ 158.06 $ 161.63 Adjusted book value per ordinary share (1) $ 310.80 $ 281.20 $ 197.93 $ 155.94 $ 159.19 Change in adjusted book value per ordinary share 10.5 % 42.1 % 26.9 % (2.0) % 10.8 % Ordinary shares repurchased: Shares 4,010,695 178,280 — — — Cost $ 942 $ 26 $ — $ — $ — Average price per share $ 234.84 $ 145.87 $ — $ — $ — Total ordinary shares outstanding 17,657,944 21,519,602 21,511,505 21,459,997 19,406,722 Adjusted ordinary shares outstanding 17,973,149 21,993,598 21,989,971 21,881,063 19,830,767 Key Balance Sheet Metrics Total assets $ 24,429 $ 21,627 $ 19,826 $ 16,556 $ 13,606 Debt obligations $ 1,691 $ 1,373 $ 1,191 $ 862 $ 647 Total liabilities $ 17,924 $ 14,574 $ 14,531 $ 12,184 $ 9,981 Total investable assets to ordinary shareholders’ equity 3.89x 2.80x 3.25x 3.56x 3.00x Total net loss reserves to ordinary shareholders’ equity 2.07x 1.39x 1.77x 2.14x 1.74x Debt to total capitalization attributable to Enstar 21.7 % 17.1 % 19.7 % 18.1 % 17.1 % Financial Highlights - Five Years (1) Non-GAAP financial measure, refer to pages 17 to 31 for explanatory notes and a reconciliation to the most directly comparable GAAP measure. (2) The 2017 statement of earnings and 2016, 2017 and 2018 balance sheets have not been restated to reflect the impact of the 2020 StarStone U.S. discontinued operations classification.
| enstargroup.com 7 Book Value Per Share & Return on Equity - Five Years Growth in Book Value Per Ordinary Share and Adjusted Book Value Per Ordinary Share* Annual % Change $161.63 $158.06 $201.39 $286.45 $316.34 $159.19 $155.94 $197.93 $281.20 $310.80 Book Value Per Ordinary Share Adjusted Book Value Per Ordinary Share* 2017 2018 2019 2020 2021 $0 $50 $100 $150 $200 $250 $300 $350 Return on Equity and Adjusted Return on Equity* 11.1% (5.2)% 26.6% 39.7% 7.1% 11.0% 2.5% 19.6% 43.6% 9.2% Return on Equity Adjusted Return on Equity* 2017 2018 2019 2020 2021 (2.2)% (2.0)% 27.4% 26.9% 42.2% 42.1% 10.4% 10.5% 11.7% 10.8% * Non-GAAP financial measure, refer to page 17 for further details. See also pages 19, 20 and 21 for a reconciliation to the most directly comparable GAAP measure.
| enstargroup.com 8 Consolidated Results by Segment - Q4 2021 Three Months Ended December 31, 2021 Run-off Enhanzed Re Investments Legacy Underwriting Corporate & Other (1) Total in millions of U.S. dollars INCOME Net premiums earned $ 28 $ 5 $ — $ 8 $ — $ 41 Net investment income — — 79 2 — 81 Net realized losses — — (81) — — (81) Net unrealized gains (losses) — — 88 (1) — 87 Other income (expense) 25 — — (4) (6) 15 Net gain on purchase and sales of subsidiaries — — — — 11 11 53 5 86 5 5 154 EXPENSES Net incurred losses and loss adjustment expenses (131) 2 — — 62 (67) Policyholder benefit expenses — (4) — — 1 (3) Acquisition costs 7 — — — — 7 General and administrative expenses 49 1 12 5 31 98 (75) (1) 12 5 94 35 EARNINGS (LOSS) BEFORE INTEREST EXPENSE, FOREIGN EXCHANGE AND INCOME TAXES 128 6 74 — (89) 119 Loss from equity method investments — — (8) — — (8) SEGMENT INCOME (LOSS) $ 128 $ 6 $ 66 $ — (89) 111 Interest expense (17) (17) Net foreign exchange gains 3 3 Income tax expense (14) (14) NET EARNINGS 83 Net earnings attributable to noncontrolling interest (2) (2) NET EARNINGS ATTRIBUTABLE TO ENSTAR 81 Dividends on preferred shares (9) (9) NET EARNINGS (LOSS) ATTRIBUTABLE TO ENSTAR ORDINARY SHAREHOLDERS $ (128) $ 72 (1) Other income (expense) for corporate and other activities includes the amortization of fair value adjustments associated with the acquisition of DCo and Morse TEC. Net incurred losses and loss adjustment expenses for corporate and other activities includes amortization of DCAs on retroactive reinsurance contracts and fair value adjustments associated with the acquisition of companies and the changes in the discount rate and risk margin components of the fair value of liabilities related to our assumed retroactive reinsurance agreements for which we have elected the fair value option. Amortization of DCAs includes net cumulative effect adjustments arising as a result of prior period development on net ultimate liabilities recorded in our Run-off segment.
| enstargroup.com 9 Consolidated Results by Segment - Q4 2020 Three Months Ended December 31, 2020 Run-off Investments Legacy Underwriting Corporate & Other (1) Total in millions of U.S. dollars INCOME Net premiums earned $ 15 $ — $ 93 $ — $ 108 Net investment income — 55 7 — 62 Net realized gains — 6 — — 6 Net unrealized gains — 784 13 — 797 Other income (expense) 35 — 11 (2) 44 Net gain of sale of subsidiaries — — — 3 3 50 845 124 1 1,020 EXPENSES Net incurred losses and loss adjustment expenses (56) — 94 38 76 Acquisition costs 7 — 31 — 38 General and administrative expenses 55 13 29 46 143 6 13 154 84 257 EARNINGS (LOSS) BEFORE INTEREST EXPENSE, FOREIGN EXCHANGE AND INCOME TAXES 44 832 (30) (83) 763 Earnings from equity method investments — 86 — — 86 SEGMENT INCOME (LOSS) $ 44 $ 918 $ (30) (83) 849 Interest expense (16) (16) Net foreign exchange losses (15) (15) Income tax benefit 1 1 NET EARNINGS FROM CONTINUING OPERATIONS 819 Net earnings from discontinued operations, net of income taxes 15 15 NET EARNINGS 834 Net earnings attributable to noncontrolling interest (3) (3) NET EARNINGS ATTRIBUTABLE TO ENSTAR 831 Dividends on preferred shares (9) (9) NET EARNINGS (LOSS) ATTRIBUTABLE TO ENSTAR ORDINARY SHAREHOLDERS $ (110) $ 822 (1) Other income (expense) for corporate and other activities includes the amortization of fair value adjustments associated with the acquisition of DCo and Morse TEC. Net incurred losses and loss adjustment expenses for corporate and other activities includes amortization of DCAs on retroactive reinsurance contracts and fair value adjustments associated with the acquisition of companies and the changes in the discount rate and risk margin components of the fair value of liabilities related to our assumed retroactive reinsurance agreements for which we have elected the fair value option. Amortization of DCAs includes net cumulative effect adjustments arising as a result of prior period development on net ultimate liabilities recorded in our Run-off segment.
| enstargroup.com 10 Consolidated Results by Segment - 2021 Year Ended December 31, 2021 Run-off Enhanzed Re Investments Legacy Underwriting Corporate & Other (1) Total in millions of U.S. dollars INCOME Net premiums earned $ 182 $ 5 $ — $ 58 $ — $ 245 Net investment income — — 309 3 312 Net realized losses — — (61) — — (61) Net unrealized gains losses — — 181 (3) — 178 Other income (expense) 73 — — (15) (16) 42 Net gain on purchase and sales of subsidiaries — — — — 73 73 255 5 429 43 57 789 EXPENSES Net incurred losses and loss adjustment expenses (194) 2 — 20 61 (111) Policyholder benefit expenses (4) — 1 (3) Acquisition costs 44 — — 13 — 57 General and administrative expenses 188 1 37 10 131 367 38 (1) 37 43 193 310 EARNINGS (LOSS) BEFORE INTEREST EXPENSE, FOREIGN EXCHANGE AND INCOME TAXES 217 6 392 — (136) 479 Earnings from equity method investments — 93 — — 93 SEGMENT INCOME (LOSS) $ 217 $ 6 $ 485 $ — (136) 572 Interest expense (69) (69) Net foreign exchange gains 12 12 Income tax expense (27) (27) NET EARNINGS 488 Net earnings attributable to noncontrolling interest (15) (15) NET EARNINGS ATTRIBUTABLE TO ENSTAR 473 Dividends on preferred shares (36) (36) NET EARNINGS (LOSS) ATTRIBUTABLE TO ENSTAR ORDINARY SHAREHOLDERS $ (271) $ 437 (1) Other income (expense) for corporate and other activities includes the amortization of fair value adjustments associated with the acquisition of DCo and Morse TEC. Net incurred losses and loss adjustment expenses for corporate and other activities includes amortization of DCAs on retroactive reinsurance contracts and fair value adjustments associated with the acquisition of companies and the changes in the discount rate and risk margin components of the fair value of liabilities related to our assumed retroactive reinsurance agreements for which we have elected the fair value option. Amortization of DCAs includes net cumulative effect adjustments arising as a result of prior period development on net ultimate liabilities recorded in our Run-off segment.
| enstargroup.com 11 Consolidated Results by Segment - 2020 Year Ended December 31, 2020 Run-off Investments Legacy Underwriting Corporate & Other (1) Total in millions of U.S. dollars INCOME Net premiums earned $ 59 $ — $ 513 $ — $ 572 Net investment income — 270 33 — 303 Net realized gains — 17 2 — 19 Net unrealized gains — 1,611 12 — 1,623 Other income (expense) 132 — 27 (19) 140 Net gain of sale of subsidiaries — — — 3 3 191 1,898 587 (16) 2,660 EXPENSES Net incurred losses and loss adjustment expenses (145) — 371 190 416 Acquisition costs 20 — 151 — 171 General and administrative expenses 173 35 158 136 502 48 35 680 326 1,089 EARNINGS (LOSS) BEFORE INTEREST EXPENSE, FOREIGN EXCHANGE AND INCOME TAXES 143 1,863 (93) (342) 1,571 Earnings from equity method investments — 239 — — 239 SEGMENT INCOME (LOSS) $ 143 $ 2,102 $ (93) (342) 1,810 Interest expense (59) (59) Net foreign exchange losses (16) (16) Income tax expense (24) (24) NET EARNINGS FROM CONTINUING OPERATIONS 1,711 Net earnings from discontinued operations, net of income taxes 16 16 NET EARNINGS 1,727 Net loss attributable to noncontrolling interest 28 28 NET EARNINGS ATTRIBUTABLE TO ENSTAR 1,755 Dividends on preferred shares (36) (36) NET EARNINGS (LOSS) ATTRIBUTABLE TO ENSTAR ORDINARY SHAREHOLDERS $ (433) $ 1,719 (1) Other income (expense) for corporate and other activities includes the amortization of fair value adjustments associated with the acquisition of DCo and Morse TEC. Net incurred losses and loss adjustment expenses for corporate and other activities includes amortization of DCAs on retroactive reinsurance contracts and fair value adjustments associated with the acquisition of companies and the changes in the discount rate and risk margin components of the fair value of liabilities related to our assumed retroactive reinsurance agreements for which we have elected the fair value option. Amortization of DCAs includes net cumulative effect adjustments arising as a result of prior period development on net ultimate liabilities recorded in our Run-off segment.
| enstargroup.com 12 Prior Period Development (“PPD”) by Acquisition year PPD in Year Ended December 31, Acquisition Year 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 (in millions of U.S. dollars) (unaudited) 2011 and prior $ 261 $ 211 $ 237 $ 226 $ 117 $ 81 $ 50 $ 70 $ 38 $ 28 2012 (23) 48 22 13 12 9 11 2 7 5 2013 (2) 30 43 32 43 46 14 15 9 2014(1) 30 18 18 34 (112) (110) 1 25 2015 72 131 29 68 15 10 13 2016 9 (36) 17 8 20 9 2017 84 98 (84) (50) 89 2018 31 35 17 44 2019 16 3 9 2020 (72) 12 2021 40 $ 238 $ 257 $ 319 $ 372 $ 319 $ 244 $ 209 $ (34) $ (11) $ 283 Acquisition Year Cumulative PPD in Year Ended December 31, 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 (in millions of U.S. dollars) (unaudited) 2011 and prior $ 261 $ 472 $ 709 $ 935 $ 1,052 $ 1,133 $ 1,183 $ 1,253 $ 1,291 $ 1,319 2012 (23) 25 47 60 72 81 92 94 101 106 2013 (2) 28 71 103 146 192 206 221 230 2014(1) 30 48 66 100 (12) (122) (121) (96) 2015 72 203 232 300 315 325 338 2016 9 (27) (10) (2) 18 27 2017 84 182 98 48 137 2018 31 66 83 127 2019 16 19 28 2020 (72) (60) 2021 40 (1) The 2014 acquisition year includes losses relating to our StarStone business when this business was actively managed within our Legacy Underwriting segment.
| enstargroup.com 13 Ultimate Losses % Acquired Losses by Acquisition Year Ultimate Losses for the Years Ended December 31, Assumed and Acquired net losses and LAE Acquisition Year Third Party Related Party Total 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 (in millions of U.S. dollars) (Unaudited) 2011 and prior(1) $ 2,857 $ — $ 2,857 $ 2,596 $ 2,385 $ 2,148 $ 1,922 $ 1,805 $ 1,724 $ 1,674 $ 1,604 $ 1,566 $ 1,538 2012 418 — 418 441 393 371 358 346 337 326 324 317 312 2013 854 — 854 856 826 783 751 708 662 648 633 624 2014 1,057 — 1,057 1,027 1,009 991 957 1,069 1,179 1,178 1,153 2015 1,756 — 1,756 1,684 1,553 1,524 1,456 1,441 1,431 1,418 2016 1,357 — 1,357 1,348 1,384 1,367 1,359 1,339 1,330 2017 1,536 — 1,536 1,452 1,354 1,438 1,488 1,399 2018 2,757 — 2,757 2,726 2,691 2,674 2,630 2019 1,817 — 1,817 1,801 1,798 1,789 2020 2,191 — 2,191 2,263 2,251 2021(2) 3,698 840 4,538 4,498 Ultimate Losses as a Percentage of Assumed and Acquired Net Loss Reserves At End of Year of Acquisition Years thereafter: Acquisition Year One Two Three Four Five Six Seven Eight Nine Ten (Unaudited) 2011 and prior 100 % 91 % 83 % 75 % 67 % 63 % 60 % 59 % 56 % 55 % 54 % 2012 106 % 94 % 89 % 86 % 83 % 81 % 78 % 78 % 76 % 75 % 2013 100 % 97 % 92 % 88 % 83 % 78 % 76 % 74 % 73 % 2014(3) 97 % 95 % 94 % 91 % 101 % 112 % 111 % 109 % 2015 96 % 88 % 87 % 83 % 82 % 81 % 81 % 2016 99 % 102 % 101 % 100 % 99 % 98 % 2017 95 % 88 % 94 % 97 % 91 % 2018 99 % 98 % 97 % 95 % 2019 99 % 99 % 98 % 2020 103 % 103 % 2021 99 % (1) For the 2011 and prior acquisition years, the net reserves shown are as at December 31, 2011, and are not the net reserves assumed and acquired. (2) 2021 Assumed and Acquired net losses and LAE - Related Party of $840 million relates to the acquisition of Enhanzed Re (3) The 2014 acquisition year includes losses relating to our StarStone business when this business was actively managed within our Legacy Underwriting segment.
| enstargroup.com 14 Adjusted PPD by Acquisition Year* Adjusted PPD* in Year Ended December 31, Acquisition Year 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 (in millions of U.S. dollars) (Unaudited) 2011 and prior $ 248 $ 203 $ 221 $ 212 $ 84 $ 77 $ 61 $ 71 $ 43 $ 24 2012 (27) 42 21 13 10 7 10 — 8 2 2013 (32) (5) (2) 63 18 26 5 6 2 2014 7 (29) (1) (2) 6 2 2 29 2015 58 111 18 59 10 9 11 2016 6 (36) 37 10 31 9 2017 100 73 (3) 31 25 2018 23 82 48 26 2019 8 86 45 2020 (77) (3) 2021 24 $ 221 $ 213 $ 244 $ 252 $ 273 $ 182 $ 295 $ 185 $ 187 $ 194 Acquisition Year Cumulative Adjusted PPD* in Year Ended December 31, 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 (in millions of U.S. dollars) (Unaudited) 2011 and prior $ 248 $ 451 $ 672 $ 884 $ 968 $ 1,045 $ 1,106 $ 1,177 $ 1,220 $ 1,244 2012 (27) 15 36 49 59 66 76 76 84 86 2013 (32) (37) (39) 24 42 68 73 79 81 2014 7 (22) (23) (25) (19) (17) (15) 14 2015 58 169 187 246 256 265 276 2016 6 (30) 7 17 48 57 2017 100 173 170 201 226 2018 23 105 153 179 2019 8 94 139 2020 (77) (80) 2021 24 * Non-GAAP financial measure. Refer to explanatory notes on pages 17 and 18 for further details. See also pages 27 and 28 for a reconciliation to the most directly comparable GAAP measure.
| enstargroup.com 15 Adjusted Ultimate Losses % Acquired Losses* Adjusted Assumed and Acquired net losses and LAE* Adjusted Ultimate Losses* for the Years Ended December 31, (1) Acquisition Year Third Party Related Party Total 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 (in millions of U.S. dollars) (Unaudited) 2011 and prior(1) $ 2,822 $ — $ 2,822 $ 2,574 $ 2,371 $ 2,150 $ 1,938 $ 1,854 $ 1,777 $ 1,716 $ 1,645 $ 1,602 $ 1,578 2012 398 — 398 425 383 362 349 339 332 322 322 314 312 2013 614 — 614 646 651 653 590 572 546 541 535 533 2014 410 — 410 403 432 433 435 429 427 425 396 2015 1,675 — 1,675 1,617 1,506 1,488 1,429 1,419 1,410 1,399 2016 1,446 — 1,446 1,440 1,476 1,439 1,429 1,398 1,389 2017 1,596 — 1,596 1,496 1,423 1,426 1,395 1,370 2018 2,801 — 2,801 2,778 2,696 2,648 2,622 2019 2,251 — 2,251 2,243 2,157 2,112 2020 2,141 — 2,141 2,218 2,221 2021(2) 3,568 1,611 5,179 5,155 Adjusted Ultimate Losses* as a Percentage of Adjusted Assumed and Acquired Net Loss Reserves* At End of Year of Acquisition Years thereafter: Acquisition Year One Two Three Four Five Six Seven Eight Nine Ten (Unaudited) 2011 and prior 100 % 91 % 84 % 76 % 69 % 66 % 63 % 61 % 58 % 57 % 56 % 2012 107 % 96 % 91 % 88 % 85 % 83 % 81 % 81 % 79 % 78 % 2013 105 % 106 % 106 % 96 % 93 % 89 % 88 % 87 % 87 % 2014 98 % 105 % 106 % 106 % 105 % 104 % 104 % 97 % 2015 97 % 90 % 89 % 85 % 85 % 84 % 84 % 2016 100 % 102 % 100 % 99 % 97 % 96 % 2017 94 % 89 % 89 % 87 % 86 % 2018 99 % 96 % 95 % 94 % 2019 100 % 96 % 94 % 2020 104 % 104 % 2021 100 % (1) For the 2011 and prior acquisition year, the adjusted net reserves shown are as at December 31, 2011 and are not the adjusted net reserves assumed and acquired. (2) 2021 Adjusted Assumed and Acquired net losses and LAE - Related Party of $1,611 million relates to the acquisition of Enhanzed Re and the transfer of StarStone International into the Run-Off segment * Non-GAAP financial measure. Adjusted ultimate losses presented in the table represent the cumulative impact on adjusted acquired & assumed net loss reserves of adjusted PPD. Reconciliations of adjusted acquired and assumed net loss reserves and adjusted PPD are included on pages 27 to 29 in the Non-GAAP measures section.
| enstargroup.com 16 Capital position December 31, 2021 December 31, 2020 Change Ordinary shareholders' equity $ 5,586 $ 6,164 $ (578) Series D and E preferred shares 510 510 — Total Enstar Group Limited shareholders' equity 6,096 6,674 (578) Noncontrolling interest 230 14 216 Total shareholders' equity 6,326 6,688 (362) Senior notes 1,270 843 427 Subordinated notes 421 345 76 Revolving credit facility — 185 (185) Total debt obligations 1,691 1,373 318 Redeemable noncontrolling interest 179 365 (186) Total capitalization $ 8,196 $ 8,426 $ (230) Total capitalization attributable to Enstar $ 7,787 $ 8,047 $ (260) Debt to total capitalization 20.6 % 16.3 % 4.3 % Debt and Series D and E Preferred Shares to total capitalization 26.9 % 22.3 % 4.6 % Debt to total capitalization attributable to Enstar 21.7 % 17.1 % 4.6 % Debt and Series D and E Preferred Shares to total capitalization attributable to Enstar 28.3 % 23.4 % 4.9 % Capital Position & Credit Ratings Credit ratings (1) Standard and Poor’s Fitch Ratings Long-term issuer BBB (Outlook: Positive) BBB (Outlook: Positive) 2022 and 2029 Senior Notes BBB BBB- 2031 Senior Notes BBB- BBB- 2040 and 2042 Junior Subordinated Notes (2) BB+ BB+ 2031 Subordinated Notes Not Rated Not Rated Series D and E Preferred Shares BB+ BB+ (1) Credit ratings are provided by third parties, Standard and Poor’s and Fitch Ratings, and are subject to certain limitations and disclaimers. For information on these ratings, refer to the rating agencies’ websites and other publications. (2) 2042 Junior Subordinated Notes issued on January 14, 2022. See Note 25 - "Subsequent Events" to our consolidated financial statements included within Item 8 of our Annual Report on Form 10-K for the period ended December 31, 2021 for further information.
| enstargroup.com 17 Non-GAAP Measures Non-GAAP Measure Definition Purpose of Non-GAAP Measure over GAAP Measure Adjusted book value per ordinary share Total Enstar ordinary shareholders' equity, adjusted to add: -proceeds from assumed exercise of warrants Divided by Number of ordinary shares outstanding, adjusted for: -shares issued from assumed exercise of warrants, -the ultimate effect of any dilutive securities on the number of ordinary shares outstanding Increases the number of ordinary shares to reflect the exercise of warrants and equity awards granted but not yet vested as, over the long term, this presents a prudent view of our book value per share. We use this non-GAAP measure in our annual incentive compensation program. Adjusted return on equity Adjusted operating income (loss) attributable to Enstar ordinary shareholders divided by adjusted opening Enstar ordinary shareholder's equity Although we have historically disclosed adjusted operating income (loss) attributable to Enstar ordinary shareholders, calculating the operating income (loss) as a percentage of our adjusted opening Enstar ordinary shareholders' equity provides a more valuable and consistent measure of the performance of our business, and enhances comparisons to prior periods: • by adjusting investment returns for the temporary impact of the change in fair value of fixed maturity securities (both credit spreads and interest rates) which we hold until the earlier of maturity or used to fund any settlement of related liabilities which are generally recorded at cost. • by removing the impact of non-cash charges that obscure our trends on a consistent basis. • by removing items that are not indicative of our ongoing operations; We use this non-GAAP measure in our annual incentive compensation program. We now include the amortization of fair value adjustments as a non-GAAP adjustment to the adjusted operating income (loss) attributable to Enstar ordinary shareholders as it is considered to be a non-cash charge and not indicative of our operating results. Prior periods were restated for this revision. Adjusted operating income (loss) attributable to Enstar ordinary shareholders (numerator) Net earnings (loss) attributable to Enstar ordinary shareholders, adjusted for: -net realized and unrealized (gains) losses on fixed maturity investments and funds held-directly managed -change in fair value of insurance contracts for which we have elected the fair value option (1) -amortization of fair value adjustments -net gain/loss on purchase and sales of subsidiaries -net earnings from discontinued operations -tax effects of adjustments -adjustments attributable to noncontrolling interest Adjusted opening Enstar ordinary shareholders' equity (denominator) Opening Enstar ordinary shareholders' equity, less: -unrealized gains (losses) on fixed maturity investments and funds held-directly managed, -fair value of insurance contracts for which we have elected the fair value option (1), -fair value adjustments, and -net assets of held for sale or disposed subsidiaries classified as discontinued operations Adjusted total investment return (%) Adjusted total investment return (dollars) recognized in earnings for the applicable period divided by period average adjusted total investable assets. Provides a key measure of the return generated on the capital held in the business and is reflective of our investment strategy. Provides a consistent measure of investment returns as a percentage of all assets generating investment returns. Adjusts investment returns for the temporary impact of the change in fair value of fixed maturity securities (both credit spreads and interest rates) which we hold until the earlier of maturity or used to fund any settlement of related liabilities which are generally recorded at cost. Adjusted total investment return ($) (numerator) Total investment return (dollars), adjusted for: -net realized and unrealized (gains) losses on fixed maturity investments and funds held-directly managed Adjusted average aggregate total investable assets (denominator) Total average investable assets, adjusted for: -unrealized (gains) losses on fixed maturities, AFS investments included within AOCI -unrealized (gains) losses on fixed maturities, trading instruments (1) Comprises the discount rate and risk margin components. (1) Comprises the discount rate and risk margin components.
| enstargroup.com 18 Non-GAAP Measures (continued) Non-GAAP Measure Definition Purpose of Non-GAAP Measure over GAAP Measure Adjusted run-off liability earnings (%) Adjusted PPD divided by average adjusted net loss reserves Calculating the RLE as a percentage of our adjusted average net loss reserves provides a more meaningful measurement of our claims management performance. We use this measure to evaluate our ability to settle our obligations for amounts less than our initial estimate at the point of acquiring the obligations. In order to provide a complete and consistent picture of our claims performance, we combine the reduction (increase) in estimates of prior period net ultimate losses relating to our Run-off segment with the amortization of deferred charge assets, both of which are included in net incurred losses and LAE and have an inverse effect on our results. We also include our performance in managing our defendant A&E liabilities, that do not form part of loss reserves. The remaining components of net incurred losses and LAE and net loss reserves are not considered key components of our claims performance as they are either not non-life run-off in nature, or are considered to be non-cash charges that obscure our trends on a consistent basis. We use this measure to assess the performance of our claim strategies and part of the performance assessment of our past acquisitions. Adjusted prior period development (numerator) Prior period net incurred losses and LAE, adjusted to: Remove: -Legacy Underwriting and Enhanzed Re operations -the reduction/(increase) in provisions for unallocated LAE (ULAE) -amortization of fair value adjustments, -change in fair value of insurance contracts for which we have elected the fair value option (1), and Add: -the reduction/(increase) in estimates of our defendant A&E ultimate net liabilities. Adjusted net loss reserves (denominator) Net losses and LAE, adjusted to: Remove: -Legacy Underwriting and Enhanzed Re net loss reserves -the net ULAE provision -net fair value adjustments associated with the acquisition of companies, -the fair value adjustments for contracts for which we have elected the fair value option (1) and Add: -net nominal defendant asbestos and environmental exposures. Investable assets - management’s view Investable assets, adjusted to reallocate certain categories of investments based on management's view of the underlying economic exposure of a particular investment. Refer to the reconciliation for further details. Management’s view “looks through” the legal form of an investment and aggregates the classification based upon the underlying economic exposure of each investment, which is consistent with the manner in which management views our investment portfolio composition. (1) Comprises the discount rate and risk margin components.
| enstargroup.com 19 Reconciliation to Adjusted Book Value Per Share For the Year Ended December 31, 2021 2020 2019 Equity (1) Ordinary Shares Per Share Amount Equity (1) Ordinary Shares Per Share Amount Equity (1) Ordinary Shares Per Share Amount (in millions of U.S. dollars, except share and per share data) Book value per ordinary share $ 5,586 17,657,944 $ 316.34 $ 6,164 21,519,602 $ 286.45 $ 4,332 21,511,505 $ 201.39 Non-GAAP adjustments: Share-based compensation plans — 315,205 — 298,095 302,565 Warrants — — 20 175,901 20 175,901 Adjusted book value per ordinary share* $ 5,586 17,973,149 $ 310.80 $ 6,184 21,993,598 $ 281.20 $ 4,352 21,989,971 $ 197.93 For the Year Ended December 31, 2018 2017 Equity (1) Ordinary Shares Per Share Amount Equity (1) Ordinary Shares Per Share Amount (in millions of U.S. dollars, except share and per share data) Book value per ordinary share $ 3,392 21,459,997 $ 158.06 $ 3,137 19,406,722 $ 161.63 Non-GAAP adjustments: Share-based compensation plans — 245,165 248,144 Warrants 20 175,901 20 175,901 Adjusted book value per ordinary share* $ 3,412 21,881,063 $ 155.94 $ 3,157 19,830,767 $ 159.19 (1) Equity comprises Enstar ordinary shareholders' equity, which is calculated as Enstar shareholders' equity less preferred shares ($510 million as of December 31, 2021, 2020, 2019, and 2018, respectively), prior to any non-GAAP adjustments. * Non-GAAP financial measure.
| enstargroup.com 20 Reconciliation to Adjusted Return on Equity - 2021, 2020 and 2019 For the Three Months Ended December 31, For the Year Ended December 31, 2021 2020 2021 2020 2019 Net earnings (1) Opening Equity (1) Ratio Net earnings (1) Opening Equity (1) Ratio Net earnings (1) Opening Equity (1) Ratio Net earnings (1) Opening Equity (1) Ratio Net earnings (1) Opening Equity (1) (6) Ratio (in millions of U.S. dollars) Net earnings/Opening equity/ROE (1) $ 72 $ 5,570 5.2 % $ 822 $ 5,311 61.9 % $ 437 $ 6,164 7.1 % $ 1,719 $ 4,332 39.7 % $ 902 $ 3,392 26.6 % Non-GAAP adjustments: Net realized and unrealized losses (gains) on fixed maturity investments and funds held - directly managed / Unrealized (losses) gains on fixed maturity investments and funds held - directly managed (2) 27 176 (99) 416 210 (560) (306) (277) (516) 227 Change in fair value of insurance contracts for which we have elected the fair value option / Fair value of insurance contracts for which we have elected the fair value option (3) (6) (100) 22 (54) (75) (33) 119 (130) 117 (244) Amortization of fair value adjustments / Fair value adjustments 3 (109) 7 (134) 16 (128) 27 (152) 51 (199) Net gain on purchase and sales of subsidiaries (11) (3) (73) (3) — Net earnings from discontinued operations / Net assets of entities classified as held for sale and discontinued operations — (15) — — (16) (266) (7) (210) Tax effects of adjustments (4) (3) 7 (21) 23 36 Adjustments attributable to noncontrolling interest (5) 2 12 6 13 109 15 86 Adjusted net earnings/Adjusted opening equity/Adjusted ROE* $ 84 $ 5,537 6.1 % $ 753 $ 5,539 54.4 % $ 500 $ 5,443 9.2 % $ 1,576 $ 3,616 43.6 % $ 598 $ 3,052 19.6 % (1) Net earnings comprises net earnings attributable to Enstar ordinary shareholders, prior to any non-GAAP adjustments. Opening equity comprises Enstar ordinary shareholders' equity, which is calculated as opening Enstar shareholders' equity less preferred shares ($510 million as of December 31, 2020, 2019 and 2018), prior to any non-GAAP adjustments. (2) Represents the net realized and unrealized gains and losses related to fixed maturity securities. Our fixed maturity securities are held directly on our balance sheet and also within the "Funds held - directly managed" balance. (3) Comprises the discount rate and risk margin components. (4) Represents an aggregation of the tax expense or benefit associated with the specific country to which the pre-tax adjustment relates, calculated at the applicable jurisdictional tax rate. (5) Represents the impact of the adjustments on the net earnings (loss) attributable to noncontrolling interest associated with the specific subsidiaries to which the adjustments relate. (6) The 2018 balance sheet has not been restated to reflect the impact of the 2020 StarStone U.S. discontinued operations classification. * Non-GAAP financial measure.
| enstargroup.com 21 Reconciliation to Adjusted Return on Equity - 2018 and 2017 For the Year Ended December 31, 2018 2017 Net earnings (1) Opening Equity (1) (5) Ratio Net earnings (1) (5) Opening Equity (1) (5) Ratio (in millions of U.S. dollars) Net earnings/Opening equity/ROE (1) $ (163) $ 3,137 (5.2) % $ 311 $ 2,802 11.1 % Non-GAAP adjustments: Remove: — — Series D and E preferred shares Net realized and unrealized losses (gains) on fixed maturity investments and funds held - directly managed / Unrealized (losses) gains on fixed maturity investments and funds held - directly managed (2) 237 (101) (71) 66 Change in fair value of insurance contracts for which we have elected the fair value option / Fair value of insurance contracts for which we have elected the fair value option (3) 7 (183) 30 — Amortization of fair value adjustments / Fair value adjustments 7 (104) 7 (108) Net gain on purchase and sales of subsidiaries — — 16 — Net earnings from discontinued operations / Net assets of entities classified as held for sale and discontinued operations (1) (157) (11) (94) Tax effects of adjustments (3) (18) — 4 — Adjustments attributable to noncontrolling interest (4) (3) 65 6 — Adjusted net earnings/Adjusted opening equity/Adjusted ROE* $ 66 $ 2,657 2.5 % $ 292 $ 2,666 11.0 % (1) Net earnings comprises net earnings attributable to Enstar ordinary shareholders, prior to any non-GAAP adjustments. Opening equity comprises Enstar shareholders' equity, prior to any non-GAAP adjustments. (2) Represents the net realized and unrealized gains and losses related to fixed maturity securities. Our fixed maturity securities are held directly on our balance sheet and also within the "Funds held - directly managed" balance. (3) Represents an aggregation of the tax expense or benefit associated with the specific country to which the pre-tax adjustment relates, calculated at the applicable jurisdictional tax rate. (4) Represents the impact of the adjustments on the net earnings (loss) attributable to noncontrolling interest associated with the specific subsidiaries to which the adjustments relate. (5) The 2017 statement of earnings and 2016 and 2017 balance sheets have not been restated to reflect the impact of the 2020 StarStone U.S. discontinued operations classification. * Non-GAAP financial measure.
| enstargroup.com 22 Reconciliation to Adjusted Total Investment Return For the Three Months Ended December 31, For the Year Ended December 31, 2021 2020 2021 2020 2019 2018 2017 (3) (in millions of U.S. dollars) Investment results Net investment income $ 81 $ 62 $ 312 $ 303 $ 308 $ 262 $ 209 Total net realized (losses) gains (81) 6 (61) 19 5 (1) 1 Total net unrealized gains (losses) 87 797 178 1,623 1,007 (407) 189 (Loss) earnings from equity method investments (8) 86 93 239 56 42 6 TIR ($) $ 79 $ 951 $ 522 $ 2,184 $ 1,376 $ (104) $ 405 Non-GAAP adjustment: Net realized and unrealized losses (gains) losses on fixed maturity investments and funds held-directly managed 27 (99) 210 (306) (516) 237 (71) Adjusted TIR ($)* $ 106 $ 852 $ 732 $ 1,878 $ 860 $ 133 $ 334 Total investments 17,276 15,257 17,276 15,257 12,620 11,242 8,755 Cash and cash equivalents, including restricted cash and cash equivalents 2,092 1,373 2,092 1,373 971 983 1,213 Funds held by reinsured companies 2,340 636 2,340 636 476 321 175 Total investable assets $ 21,708 $ 17,266 $ 21,708 $ 17,266 $ 14,067 $ 12,546 $ 10,143 Average aggregate invested assets, at fair value (1) $ 21,569 $ 16,824 $ 20,840 $ 15,443 $ 13,758 $ 10,332 $ 8,343 TIR (%) 1.5 % 22.6 % 2.5 % 14.1 % 10.0 % (1.0) % 4.9 % Non-GAAP adjustment: Net unrealized (gains) losses on fixed maturities, AFS investments included within AOCI and net unrealized (gains) losses on fixed maturities, trading instruments (89) (560) (89) (560) (275) 222 (100) Adjusted investable assets* $ 21,619 $ 16,706 $ 21,619 $ 16,706 $ 13,792 $ 12,768 $ 10,043 Adjusted average aggregate invested assets, at fair value (2) $ 21,438 $ 16,336 $ 20,561 $ 15,153 $ 13,646 $ 10,393 $ 8,303 Adjusted TIR (%)* 2.0 % 20.8 % 3.6 % 12.4 % 6.3 % 1.3 % 4.0 % (1) This amount is a five period average of the total investable assets, as presented above, and is comprised of amounts disclosed in our quarterly and annual U.S. GAAP consolidated financial statements. (2) This amount is a five period average of the adjusted investable assets, as presented above. (3) The 2017 statement of earnings and 2016 and 2017 balance sheets have not been restated to reflect the impact of the 2020 StarStone U.S. discontinued operations classification. *Non-GAAP financial measure.
| enstargroup.com 23 Reconciliation to Adjusted Run-off Liability Earnings - QTD 2021 and 2020 As at PPD December 31, 2021 Net loss reserves September 31, 2021 Net loss reserves Average net loss reserves RLE % (in millions of U.S. dollars) PPD/Net loss reserves/RLE $ 94 $ 11,555 $ 11,962 $ 11,759 3.2 % Non-GAAP Adjustments: Increase (reduction) in estimates of net ultimate losses - current period — (142) (130) (136) Enhanzed Re — (179) (180) (180) Legacy Underwriting (1) (140) (149) (145) Increase (reduction) in provisions for ULAE (17) (412) (428) (420) Amortization of fair value adjustments 3 106 109 108 Changes in fair value - fair value option (1) (6) 107 100 104 Change in estimate of net ultimate liabilities - defendant A&E 18 574 602 588 Adjusted PPD/Adjusted net loss reserves/Adjusted RLE* $ 91 $ 11,469 $ 11,886 $ 11,678 3.1 % (1) Comprises the discount rate and risk margin components. * Non-GAAP financial measure. As at PPD December 31, 2020 Net loss reserves September 31, 2020 Net loss reserves Average net loss Reserves RLE % (in millions of U.S. dollars) PPD/Net loss reserves/RLE $ 15 $ 8,544 $ 8,397 $ 8,471 0.7 % Non-GAAP Adjustments: Increase (reduction) in estimates of net ultimate losses - current period — (273) (282) (278) Legacy Underwriting 9 (702) (717) (710) Increase (reduction) in provisions for ULAE (13) (334) (322) (328) Amortization of fair value adjustments 7 128 135 132 Changes in fair value - fair value option (1) 22 33 54 44 Change in estimate of net ultimate liabilities - defendant A&E 28 615 541 578 Adjusted PPD/Adjusted net loss reserves/Adjusted RLE* $ 68 $ 8,011 $ 7,806 $ 7,909 3.4 %
| enstargroup.com 24 Reconciliation to Adjusted Run-off Liability Earnings - 2021 and 2020 As of December 31, 2020 2020 2019 2020 2020 PPD Net loss reserves Net loss reserves Average net loss Reserves RLE % (in millions of U.S. dollars) PPD/Net loss reserves/RLE $ (11) $ 8,544 $ 7,680 $ 8,112 (0.1) % Non-GAAP Adjustments: Increase (reduction) in estimates of net ultimate losses - current period — (273) — (137) Legacy Underwriting (4) (702) (1,184) (943) Increase (reduction) in provisions for ULAE (48) (334) (332) (333) Amortization of fair value adjustments 28 128 152 140 Changes in fair value - fair value option (1) 119 33 130 82 Change in estimate of net ultimate liabilities - defendant A&E 103 615 561 588 Adjusted PPD/Adjusted net loss reserves/Adjusted RLE* $ 187 $ 8,011 $ 7,007 $ 7,509 2.5 % (1) Comprises the discount rate and risk margin components. * Non-GAAP financial measure. As at December 31, 2021 2021 2020 2021 2021 PPD Net loss reserves Net loss reserves Average net loss reserves RLE % (in millions of U.S. dollars) PPD/Net loss reserves/RLE $ 283 $ 11,555 $ 8,544 $ 10,050 2.8 % Non-GAAP Adjustments: Increase (reduction) in estimates of net ultimate losses - current period — (142) — (71) Enhanzed Re — (179) — (90) Legacy Underwriting (7) (140) (955) (548) Increase (reduction) in provisions for ULAE (61) (412) (334) (373) Amortization of fair value adjustments 16 106 128 117 Changes in fair value - fair value option (1) (75) 107 33 70 Change in estimate of net ultimate liabilities - defendant A&E 38 574 615 595 Adjusted PPD/Adjusted net loss reserves/Adjusted RLE* $ 194 $ 11,469 $ 8,031 $ 9,750 2.0 %
| enstargroup.com 25 Reconciliation to Adjusted Run-off Liability Earnings - 2019 and 2018 As of December 31, 2019 2019 2018 2019 2019 PPD Net loss reserves Net loss reserves Average net loss reserves RLE % (in millions of U.S. dollars) PPD/Net loss reserves/RLE $ (34) $ 7,680 $ 7,254 $ 7,467 (0.5) % Non-GAAP Adjustments: Increase (reduction) in estimates of net ultimate losses - current period — (401) — (201) Legacy Underwriting 105 (842) (1,162) (1,002) Increase (reduction) in provisions for ULAE (58) (332) (333) (333) Amortization of fair value adjustments 51 152 199 176 Changes in fair value - fair value option 117 130 244 187 Change in estimate of net ultimate liabilities - defendant A&E 4 561 85 323 Adjusted PPD/Adjusted net loss reserves/Adjusted RLE* $ 185 $ 6,948 $ 6,287 $ 6,617 2.8 % As of December 31, 2018 2018 2017 2018 2018 PPD Net loss reserves (2) Net loss reserves (2) Average net loss reserves (2) RLE % (in millions of U.S. dollars) PPD/Net loss reserves/RLE $ 209 $ 7,254 $ 5,448 $ 6,351 3.3 % Non-GAAP Adjustments: Increase (reduction) in estimates of net ultimate losses - current period — (357) — (179) Legacy Underwriting 115 (818) (946) (882) Increase (reduction) in provisions for ULAE (65) (333) (301) (317) Amortization of fair value adjustments 7 199 103 151 Changes in fair value - fair value option (1) 7 244 182 213 Change in estimate of net ultimate liabilities - defendant A&E 23 84 113 99 Adjusted PPD/Adjusted net loss reserves/Adjusted RLE* $ 296 $ 6,273 $ 4,599 $ 5,436 5.4 % (1) Comprises the discount rate and risk margin components. (2) The 2017 statement of earnings and 2017 and 2018 balance sheets have not been restated to reflect the impact of the 2020 StarStone U.S. discontinued operations classification. * Non-GAAP financial measure.
| enstargroup.com 26 Reconciliation to Adjusted Run-off Liability Earnings - 2017 For the Year Ended December 31, 2017 2017 2016 2017 2017 PPD (2) Net loss reserves (2) Net loss reserves (2) Average net loss reserves (2) RLE % (in millions of U.S. dollars) PPD/Net loss reserves/RLE $ 244 $ 5,448 $ 4,505 $ 4,977 4.9 % Non-GAAP Adjustments: Increase (reduction) in estimates of net ultimate losses - current period — (356) — (178) Legacy Underwriting (44) (593) (870) (732) Increase (reduction) in provisions for ULAE (54) (301) (218) (260) Amortization of fair value adjustments 6 103 107 105 Changes in fair value - fair value option (1) 30 182 — 91 Change in estimate of net ultimate liabilities - defendant A&E (3) 113 118 116 Adjusted PPD/Adjusted net loss reserves/Adjusted RLE* $ 179 $ 4,596 $ 3,642 $ 4,119 4.3 % (1) Comprises the discount rate and risk margin components. (2) The 2017 statement of earnings and 2016 and 2017 balance sheets have not been restated to reflect the impact of the 2020 StarStone U.S. discontinued operations classification. * Non-GAAP financial measure.
| enstargroup.com 27 Reconciliation of PPD by Acquisition Year PPD in year ended December 31 Acquisition year 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 (in millions of U.S. dollars) 2011 PPD $ 261 $ 211 $ 237 $ 226 $ 117 $ 81 $ 50 $ 70 $ 38 $ 28 FVA 26 34 22 20 24 14 17 14 7 5 ULAE run-off (39) (42) (38) (33) (57) (18) (7) (13) (2) (9) 2011 Adjusted PPD* 248 203 221 213 84 77 60 71 43 24 2012 PPD (23) 48 22 13 12 9 11 2 7 5 FVA (4) — — (5) — — — — — — ULAE run-off — (6) (1) 5 (2) (2) (1) (2) 1 (3) 2012 Adjusted PPD* (27) 42 21 13 10 7 10 — 8 2 2013 PPD — (2) 30 43 32 43 46 14 15 9 Legacy — — (19) (22) (13) (21) (14) (8) (6) (6) FVA — (28) (1) — — — (2) — — — ULAE run-off — (2) (15) (23) 44 (4) (4) (1) (3) (1) 2013 Adjusted PPD* — (32) (5) (2) 63 18 26 5 6 2 2014 PPD — — 30 18 18 34 (112) (110) 1 25 Legacy — — (11) (39) (14) (27) 121 114 3 10 FVA — — (17) (16) (3) (6) (1) (2) — (3) ULAE run-off — — 5 8 (2) (3) (2) (2) (3) 2014 Adjusted PPD* — — 7 (29) (1) (2) 6 2 2 29 2015 PPD — — — 72 131 29 68 15 10 13 FVA — — — 5 5 3 2 2 1 1 ULAE run-off — — — (19) (25) (14) (11) (7) (2) (3) 2015 Adjusted PPD* — — — 58 111 18 59 10 9 11 2016 PPD — — — — 9 (36) 17 8 20 9 ULAE run-off — — — — (3) — (2) (2) — 4 Defendant A&E — — — — — — 22 4 12 (4) 2016 Adjusted PPD* — — — — 6 (36) 37 10 32 9 2017 PPD — — — — — 84 98 (84) (50) 89 FVO — — — — — 30 (11) 84 90 (54) ULAE run-off — — — — — (17) (12) (3) (10) (10) 2017 Adjusted PPD* $ — $ — $ — $ — $ — $ 97 $ 75 $ (3) $ 30 $ 25 * Non-GAAP financial measure. Cumulative Adjusted PPD on page 14 is merely the sum of the relevant numbers in the table above.
| enstargroup.com 28 Reconciliation of PPD by Acquisition Year (continued) PPD in year ended December 31 Acquisition year 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 (in millions of U.S. dollars) 2018 PPD $ — $ — $ — $ — $ — $ — $ 31 $ 35 $ 17 $ 44 Legacy — — — — — — 2 (1) (1) — FVO — — — — — — 18 33 30 (20) FVA — — — — — — (3) 35 21 13 ULAE run-off — — — — — — (25) (20) (19) (11) 2018 Adjusted PPD* — — — — — — 23 82 48 26 2019 PPD — — — — — — — 16 3 9 ULAE run-off — — — — — — — (8) (6) (6) Defendant A&E — — — — — — — — 89 42 2019 Adjusted PPD* — — — — — — — 8 86 45 2020 PPD — — — — — — — — (72) 12 FVO — — — — — — — — — ULAE run-off — — — — — — — — (5) (15) 2020 Adjusted PPD* — — — — — — — — (77) (3) 2021 PPD — — — — — — — — — 40 Legacy — — — — — — — — — (8) Enhanzed — — — — — — — — — (1) ULAE run-off — — — — — — — — — (7) 2021 Adjusted PPD* — — — — — — — — — 24 All Acquisition Years PPD 238 257 319 372 319 244 209 (34) (11) 283 Legacy — — (30) (61) (27) (44) 115 105 (4) (7) Enhanzed — — — — — — — — — — FVO — — — — — 30 7 117 119 (75) FVA 23 6 3 5 25 6 7 51 27 16 ULAE run-off (40) (50) (48) (63) (44) (54) (65) (58) (48) (61) Defendant A&E — — — — — (3) 23 4 104 38 All Acquisition Years Adjusted PPD* $ 221 $ 213 $ 244 $ 253 $ 273 $ 179 $ 296 $ 185 $ 187 $ 194 * Non-GAAP financial measure. Cumulative Adjusted PPD on page 14 is merely the sum of the relevant numbers in the table above.
| enstargroup.com 29 Reconciliation of Assumed and Acquired Reserves Non-GAAP Adjustments (2): Adjusted Assumed and Acquired net losses and LAE* Acquisition year Assumed and Acquired net losses and LAE Enhanzed Re Legacy Underwriting ULAE Fair value adjustments - acquired companies Fair value adjustments - fair value option Net Defendant A&E Liabilities Transfer from Legacy Underwriting (3) Adjusted Assumed and Acquired net losses and LAE* Third Party Related Party Total* 2011 and prior reserves as at December 31, 2021 (1) $ 2,857 $ — $ — $ (290) $ 255 $ — $ — $ — $ 2,822 $ 2,822 $ — $ 2,822 2012 418 — — (11) (9) — — — 398 398 — 398 2013 854 — (200) (12) (28) — — — 614 614 — 614 2014 1,057 — (592) (1) (54) — — — 410 410 — 410 2015 1,756 — — (107) 26 — — — 1,675 1,675 — 1,675 2016 1,357 — — (29) — — 118 — 1,446 1,446 — 1,446 2017 1,536 — (32) (123) 1 214 — — 1,596 1,596 — 1,596 2018 2,757 — (16) (120) 102 78 — — 2,801 2,801 — 2,801 2019 1,817 — — (54) — — 488 — 2,251 2,251 — 2,251 2020 2,191 — — (64) — 14 — — 2,141 2,141 — 2,141 2021 4,538 (221) — (129) 36 — — 955 5,179 3,568 1,611 5,179 (1) For the 2011 and prior acquisition years, the net reserves shown are as at December 31, 2011, and are not the net reserves assumed and acquired. (2) This reconciliation excludes any adjustment for current accident year loss reserves as it references only reserves assumed and acquired by Enstar. (3) Represents the transfer of StarStone International net losses and LAE from Legacy Underwriting to Run-off segment effective January 1, 2021. * Non-GAAP financial measure.
| enstargroup.com 30 Investable Assets - Management’s View 2021* * Non-GAAP financial measures, refer to the explanatory notes on page 18 for further details. Consolidated Balance Sheet View 2021 Exchange traded funds backed by fixed income securities Bonds, CLO equities and private debt held in equity format Equities, privately held equity, private credit and real estate held in fund format CLO equity funds Other assets and liabilities in funds held format 2021 Management's View of Underlying Economic Exposure Short-term and fixed maturity investments, trading and AFS and funds held - directly managed, excluding other assets Total $ 12,254 $ 12,254 Fixed maturities Other assets included within funds held - directly managed 201 (201) — Equities Publicly traded equities 281 5 286 Exchange-traded funds 1,342 (969) (64) 309 Privately held equities 372 (57) (8) 307 Total 1,995 902 Equities* Other Investments Hedge funds 291 291 Hedge funds Fixed income funds 573 969 64 1,606 Bond/loan funds* Equity funds 5 (5) — Private equity funds 752 (110) 642 Private equity funds* CLO equities 161 32 207 400 CLO equities* CLO equity funds 207 (207) — Private credit funds 275 25 85 385 Private credit* Real estate debt fund 69 33 102 Real estate* Total 2,333 3,426 Equity method investments 493 493 Equity method investments Total investments 17,276 17,075 Cash and cash equivalents (including restricted cash) 2,092 2,092 Cash and cash equivalents (including restricted cash) Funds held by reinsured companies 2,340 201 2,541 Funds held* Total investable assets $ 21,708 $ 21,708 Total investable assets
| enstargroup.com 31 Investable Assets - Management’s View 2020* Consolidated Balance Sheet View 2020 Exchange traded funds backed by fixed income securities Bond fund held in equity format Equities, privately held equity, private credit and real estate held in fund format Real estate held in other CLO equity funds Other assets and liabilities in funds held format 2020 Management's View of Underlying Economic Exposure Short-term and fixed maturity investments, trading and AFS and funds held - directly managed, excluding other assets Total 9,319 9,319 Fixed maturities Other assets included within funds held - directly managed 15 (15) — Equities Publicly traded equities 261 261 Exchange-traded funds 311 (156) (54) 191 292 Privately held equities 275 3 278 Total 847 831 Equities* Other Investments Hedge funds 2,638 2,638 Hedge funds Fixed income funds 553 156 54 763 Bond/loan funds* Equity funds 191 (191) — Private equity funds 363 (137) 226 Private equity funds* CLO equities 128 167 295 CLO equities* CLO equity funds 167 (167) — Private credit funds 192 107 299 Private credit* Real estate debt fund — 27 12 39 Real estate* Other 12 (12) — Total 4,244 4,260 Equity method investments 832 832 Equity method investments Total investments 15,257 15,242 Cash and cash equivalents (including restricted cash) 1,373 1,373 Cash and cash equivalents (including restricted cash) Funds held by reinsured companies 636 15 651 Funds held* Total investable assets $ 17,266 $ 17,266 Total investable assets * Non-GAAP financial measures, refer to the explanatory notes on page 18 for further details.